Grab’s pending listing through the largest-ever special purpose acquisition company (Spac) merger, raising $4.5 billion in a deal that values the company at around $38.9 billion, spares the southeast Asian ride-hailing fintech from having to draft a comprehensive listing prospectus.
But the listing has at least prompted the publication of a detailed investor presentation that sheds new light on the company and the new norms enabled by Spac structures.
You have to get a long way into the appendix, to page 50, to get to the meat, but there you find something striking.
Anthony Tan, Grab’s founder, holds 2.6% of the voting power pre-listing – and will hold 60.4% afterwards, at the same time that his holding of total ordinary shares will actually decline in percentage terms to 2.2%.
Partly this is a consequence of other key directors, including co-founder Tan Hooi Ling, committing their shares to be voted through Tan. But even so, all directors and executive officers as a group will hold 3.3% of the stock and more than 60% of the voting power.
Principal shareholders
The other side of this coin is that the principal shareholders will see their sway considerably diminished.
These are an eclectic combination: SoftBank Vision Fund, which holds 21.7% of the stock pre-listing; Uber, with 16.6%; Didi Chuxing, with 8.7%; and – explain this – Toyota Motor Corp, with 6.9%.
All of their shareholdings will shrink slightly with listing, but in each case their percentage of voting power will more than halve, with SoftBank Vision Fund down to 7.6% and Toyota down to 2.4%.
It seems unlikely that institutional investors would have been happy with such an extraordinary concentration of power
Could Tan have got away with this in a more formal IPO process? It seems unlikely that institutional investors would have been happy with such an extraordinary concentration of power. At least, there would have been greater scrutiny.
One assumes that SoftBank and the rest have allowed it for two reasons: one, because they think Tan and his team can deliver with a clear mandate untroubled by a fractious voting base; and two, because they get liquidity from the deal much faster than they would from an IPO.
Independent board
Just as interesting as what is in the presentation – like the fact that ebitda won’t turn positive until 2023 and the company made a net loss of $2.7 billion in 2020 – is what is not in it, such as any mention of an independent board.
Clarity on this will come when the F-4 registration statement is filed with the SEC; Euromoney understands this should come in late May.
Whether any of this matters to investors won’t be clear until the merged organization joins Nasdaq, sometime in the second half of the year.
The valuation then, and the stock’s performance, thereafter, will give us a clue about whether institutional buyers feel they need the rigour of traditional IPO due diligence, or are happy to take a relative leap of faith on someone who holds a lot more cards than his stake in the company would ordinarily allow.
